Transcript

00:00:00

>> At first, the talk was of an oil price spike. 24 hours on from Saudi Arabia's decision to cut ties with Qatar, traders are seeing it differently. Benchmark crude prices falling for a second day Tuesday. In focus, the outlook for a pact among oil producers to cut supply and boost prices.

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Reuters' global markets correspondent, Abhinav Ramnarayan. Qatar was a member of OPEC. And so the concerns are that the agreement to cut supply might be affected by this diplomatic spat. So that's the reason why oil prices are below $50 a barrel. Just sort of a psychological level.>> The deal to limit supply was extended in late May.

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If Qatar no longer feels bound by the agreement, it could boost output. But at about 600,000 barrels a day, it's one of the smaller players in the oil cartel. Other members would have to renege to see a big impact. That's why some traders see a bigger threat to prices elsewhere.

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US crude output up over 10% since last summer. It's now churning out more than 9 million barrels per day. If that number keeps rising, OPEC's attempts to curb production could be washed away by a tide of US oil.